At first glance, choosing a Medicare Advantage plan can appear like a “no-brainer”; after all, they combine Part A (in-patient hospital and nursing care), Part B coverage (physician medical services), and in some cases, also Part D (prescription medication) coverage.

Still, it is important to read through the fine print and review the pros and cons so you can make an informed decision and not fall victim to the pitfalls in these plans.

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Why are Medicare Advantage Plans bad?

Many beneficiaries are disappointed in their Medicare Advantage plan because of how complicated it is to get care. This is because MA plans limit your choice of doctors and hospitals to only those that are part of the plan’s network. If you decide to out-of-network providers, you need a prior authorization to do so and will often end up paying much more for the care.

These network restrictions which might be an issue for people who need complex medical care and visit doctors frequently. If you are a rather healthy person, though, Medicare Advantage might actually not be a bad choice.

Disadvantages of Medicare Advantage

 The following is a list of disadvantages of Medicare Advantage plans:

  • Most Medicare Advantage plans require members to seek care from a given network of providers. In other words, you cannot visit just any doctor you like and must stick to the list of doctors and hospitals that have signed a contract with your insurance carrier. Some plans will cover out-of-network providers but beneficiaries are charged higher fees than if they used in-network providers. Original Medicare covers any provider that accepts Medicare, and most US healthcare providers do. So it is critical that before selecting a Medicare Advantage plan you check if your preferred providers are part of the plan’s network.
  • Due to restricted and limited provider networks, Medicare Advantage plans are challenging for many people living in rural areas. Research has shown that Medicare Advantage enrollees residing in rural areas were about two times as likely to switch to Original Medicare than Medicare Advantage beneficiaries living in urban areas.
  • Some Medicare Advantage plans may require pre-authorization for specialist visits. It means you need to ask for permission to see a specialist or visit a hospital, which is not the case with Original Medicare. Many people find the process of getting this prior authorization burdensome and annoying, since it leads to delays and sometimes even denials of services.
  • Additional costs for coverage. Beneficiaries with Original Medicare (Parts A and B) are charged a premium, deductible, and co-insurance in addition to any Part D coverage expenses they may have enrolled in. Many Medicare Advantage plans often consolidate these expenses, but members may also face co-pays for specialist visits and deductibles for some prescription medications.
  • Variations in Medicare Advantage coverage by state. Original Medicare coverage is the same throughout the United States, but Medicare Advantage plans vary from state to state. If a member moves to a new state, they may need to find a new plan that covers them in their new location.
  • Medicare Advantage does not cover clinical research study tests or care.

Advantages of Medicare Advantage

The following is a list of advantages of Medicare Advantage plans:

  • There are many Medicare Advantage plans that have very low monthly premiums, and some may even be zero (in addition to Part B premium). So they tend to be more affordable than Medigap plans (also called Medicare Supplement insurance plans).
  • You are still in the Medicare Program, so you still have Medicare rights and protections.
  • You get the same Medicare Part A and Part B coverage through the plan. 
  • Most Medicare Advantage plans offer extra benefits that Original Medicare doesn’t cover such as vision, hearing, dental, prescription drug coverage, and more.
  • Your out-of-pocket costs may be lower because Medicare Advantage plans have a yearly limit on your out-of-pocket expenses for medical services. Once you reach this limit, you’ll pay nothing for covered services. Each plan can have a different limit, and the limit can change each year. Check your plan.
  • If you go to a doctor, other health care provider, facility, or supplier that belongs to the plan’s network, your services are covered.
  • You can join a Medicare Advantage plan even if you have a pre-existing condition.
  • You don’t need (and are not permitted) to buy Medigap.
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Why do doctors not like Medicare Advantage plans?

Sometimes Medicare Advantage plans aren’t advantageous to the doctors who accept them.

  • Payment Structure. Your doctors want to provide the best care to you, but they also need to make a profit. Medicare Advantage plans often use a capitated payment model, meaning that the Medicare Advantage insurance plan carriers pay doctors a set amount for care per patient per month, regardless of the services provided. If your care is more complicated than is typical for your diagnosis, the cost of care may be higher than what the insurance plan carrier pays the doctor. Doctors don’t profit unless they keep your care under budget. Apart from that, some doctors have reported longer payment processing times with Medicare Advantage plans compared to traditional Medicare, which can create financial challenges for smaller practices.
  • Less stable patient base. Medicare Advantage plans typically have networks of preferred healthcare providers. Doctors who are not in these networks may have limited opportunities to see patients with Medicare Advantage plans, potentially reducing their patient base. Apart from that, even if the patients are enrolled in Medicare Advantage plans, they may change plans or providers more frequently than those in traditional Medicare.
  • Complexity. Doctors are also aware of how complicated and expensive health insurance can be. They know that there is no one-size-fits-all policy, no matter what television commercials or insurance agents tell you. Too often, their patients don’t have all the facts about their insurance policies. Like those who don’t realize that signing up for a Medicare Advantage plan means they no longer have Original Medicare. And if their doctor takes Medicare, that doesn’t mean they also accept a Medicare Advantage plan.
  • Prior Authorization and Referral Requirements. Some physicians and other health providers may not like prior authorizations because they think of them as tedious and time-consuming. Private health insurance companies managing Medicare Advantage plans implement prior authorization requirements in efforts to control costs. They require health providers to obtain approval in advance before specific medical services are delivered and for certain prescription drugs.

Are Medicare Advantage plans a rip-off?

With any insurance plan, it’s important to know what you’re purchasing. A Medicare Advantage plan might seem like a rip-off if you were given unreliable information about how they work, but it could be your best option under the right circumstances.

With careful planning, you can choose the best option to cover your needs without being surprised by unexpected costs down the road. 

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Is Medicare Advantage good or bad?

As we discussed earlier, there are some drawbacks to Medicare Advantage plans, but they are not necessarily a bad option for everyone, and they can get a bad rap, but they are not necessarily a “rip-off.” 

As with any insurance plan, there are pros and cons of Medicare Advantage plans. They aren’t good or bad, but they can be complicated. Different people have different financial, health, lifestyle, and medical needs, so not every plan works for every person. The best way to determine whether a Medicare Advantage plan is right for you is to plan ahead.

Estimate how much care you’ll need in a year based on your current health conditions, medications, and any future tests or procedures you know you’ll need. Compare the cost of copays and premiums of different plans for your expected care to determine which plan is the better option. You might decide that the Medicare Advantage drawbacks aren’t worth the benefits for your health needs, but you may be surprised to find that a Medicare Advantage plan is your best option after all.

Here are a few examples of when Medicare Advantage plans may be a good option for some people:

  • People who need plans with lower premiums may benefit from some offered Medicare Advantage plans. Some Medicare Advantage plans have lower premiums than Original Medicare, and they set annual out-of-pocket payment caps.
  • People who live in a local geographical area and do not plan on moving. 
  • Same can be said about people whose favorite doctors/hospitals belong to the plan’s service area. 
  • People that need vision or hearing aid coverage may benefit from certain Medicare Advantage plans. Original Medicare does not generally cover either of these.

Article updated on January 24, 2024.